The status and liability of executive officers in the Hungarian judicial practice - with particular reference to the new legislation

Abstract

Under the former Hungarian Labour Code, the employer's manager and his deputy were liable for damages caused by the violation of the rules prescribed in the context of his managerial activity according to the rules of civil law. Under the previously applicable Act on Companies either the labour law rules or the rules of the Civil Code applied to the executive officer.

According to the new Civil Code, the executive officer is liable to the legal person for damages caused to the legal person during his management activities according to the rules of liability for damages caused by breach of contract.

The management of the company may be carried out by the executive officer on the basis of an agency contract or an employment contract, according to the agreement concluded with the company.

The new legislation raises the question of whether the executive officer is liable for damage caused to the company under the rules of employment law or under the civil law rules on breach of contract.